Archive for the ‘Suntech’ Category

In The New York Times on Friday, I write about how Suntech has become the first Chinese solar company to win a major U.S. power plant contract:

Suntech, the Chinese solar giant, has won a contract to supply photovoltaic panels for a 150-megawatt project in Arizona, marking China’s entry into a lucrative United States power-plant market dominated by American companies.

The project is the first phase of a planned 700-megawatt project called Mesquite Solar to be built about 40 miles west of Phoenix and operated by Sempra Generation, a subsidiary of Sempra Energy. A California utility, Pacific Gas & Electric, will purchase the electricity produced by the power plant’s first phase, called Mesquite Solar 1.

As photovoltaic panel prices have plummeted in recent years, utilities have increasingly turned to developers to build massive megawatt projects. American companies like First Solar of Tempe, Ariz., and Silicon Valley’s SunPower have captured the bulk of those contracts.

For instance, last month Southern California Edison signed contracts with SunPower to buy 711 megawatts of electricity from three large photovoltaic projects.

While Chinese companies like Suntech, Yingli Green Energy and Trina Solar have grabbed a significant percentage of the American residential solar market — supplying nearly 40 percent of panels in California — they had shied away from huge utility-scale projects.

Suntech has supplied solar panels for much smaller utility projects but expects large power plants like Mesquite Solar to account for a growing share of its United States revenues, according to Andrew Beebe, the company’s chief commercial officer.

“We think it is significant for us to win a project this large but I don’t know if it’s a China-U.S thing,” Mr. Beebe said in an interview. “We are a global company and we sell all over the world though the vast majority of our product is manufactured in China.”

Last year, Suntech opened its first American factory in Goodyear, Ariz., about 30 miles from the Mesquite site. Mr. Beebe said the factory, which is expected to have a capacity of 50 megawatts by the end of 2011, will supply less than 10 percent of the solar panels for Mesquite Solar 1.

photo: Todd Woody

I wrote this story for Reuters, where it first appeared:

China’s increasing domination of a rapidly expanding solar module industry is revealed in a report that shows that Chinese companies are expected to account for nearly 72 percent of new photovoltaic manufacturing capacity this year.

For instance, China’s LDK Solar will add the most new capacity in 2010 with 1,420 megawatts coming online, according to iSuppli, an El Segundo, Calif., technology research firm.

Norway’s REC took second place with 1,090 megawatts of manufacturing capacity expected to be added by year’s end.

But Chinese companies held seven of the top 10 positions on iSuppli’s list, representing 6,445 megawatts of manufacturing capacity.

Suntech Power Holdings will add 1,025 megawatts while JA Solar will expand manufacturing by 1,000 megawatts. Yingli Green Energy will add 800 megawatts of capacity by the end of the year while Trina Solar Energy will install an additional 700 megawatts.

“I go to Shanghai every six weeks and the scale of the operations is just jaw dropping, absolutely jaw dropping,” Conrad Burke, chief executive of Innovalight, a Silicon Valley solar company, said in a recent interview.

Innovalight itself abandoned plans to manufacture its own photovoltaic panels in late 2008 and now licenses a patented “silicon ink” to JA Solar and Yingli that boosts the efficiency of their solar modules.

“There’s nothing in California that even comes close to the scale in China,” said Burke.

In fact, earlier this month, Solyndra, a Silicon Valley startup that makes thin-film solar panels, announced it would shutter an existing factory in Fremont, Calif., and delay plans to expand a new manufacturing plant built with a $535 million federal loan guarantee. The company cited competition from low-cost Chinese manufacturers as a major factor in its move to scale back production.

photo: The White House

In The New York Times on Wednesday, I take a look at how the rapid rise of low-cost Chinese solar panel companies have forced Silicon Valley’s high-tech solar startups to retool for a global market they had not anticipated:

FREMONT, Calif. — A few years ago, Silicon Valley start-ups like Solyndra, Nanosolar and MiaSolé dreamed of transforming the economics of solar power by reinventing the technology used to make solar panels and deeply cutting the cost of production.

Founded by veterans of the Valley’s chip and hard-drive industries, these companies attracted billions of dollars in venture capital investment on the hope that their advanced “thin film” technology would make them the Intels and Apples of the global solar industry.

But as the companies finally begin mass production — Solyndra just flipped the switch on a $733 million factory here last month — they are finding that the economics of the industry have already been transformed — by the Chinese. Chinese manufacturers, heavily subsidized by their own government and relying on vast economies of scale, have helped send the price of conventional solar panels plunging and grabbed market share far more quickly than anyone anticipated.

As a result, the California companies, once so confident that they could outmaneuver the competition, are scrambling to retool their strategies and find niches in which they can thrive.

“The solar market has changed so much it’s almost enough to make you want to cry,” said Joseph Laia, chief executive of MiaSolé. “We have spent a lot more time and energy focusing on costs a year or two before we thought we had to.”

The challenges come despite extensive public and private support for the Silicon Valley companies. Solyndra, one of the biggest firms, has raised more than $1 billion from investors. The federal government provided a $535 million loan guarantee for the company’s new robot-run, 300,000-square-foot solar panel factory, known as Fab 2.

“The true engine of economic growth will always be companies like Solyndra,” President Obama said in May during an appearance at the then-unfinished factory.

But during the year that Solyndra’s plant was under construction, competition from the Chinese helped drive the price of solar modules down 40 percent. Solyndra rushed to start cranking out panels on Sept. 13, two months ahead of schedule, and it has increased marketing efforts to make the case to customers that Solyndra’s more expensive panels are cost-effective when installation charges are factored in.

“It definitely puts more pressure on us to bring our costs down as quickly as possible by ramping up volume,” said Ben Bierman, Solyndra’s executive vice president for operations and engineering, as driverless carts shuttled stacks of photovoltaic parts to large orange robots at Fab 1, the company’s original factory.

To be sure, Silicon Valley companies like Solyndra, Nanosolar and MiaSolé continue to receive hundreds of millions of dollars in customer orders and some plan to expand local manufacturing. But the rapid rise of low-cost Chinese manufacturers has made investors — who once envisioned the region’s future as Solar Valley — skittish about backing new capital-intensive start-ups.

“I don’t see another Solyndra being done,” said Anup Jacob, whose private equity firm, Virgin Green Fund, has invested significantly in Solyndra. “It’s very difficult today to show a business plan to investors and say, ‘I need hundreds of millions to a billion dollars to get to scale.’ ”

In the third quarter of 2010, venture capital investment in solar companies plummeted to $144 million from $451 million in the year-ago quarter, according to the Cleantech Group, a San Francisco research firm.

The paucity of capital and the sheer size of Chinese solar panel makers have proved particularly problematic for companies like Solyndra and MiaSolé, which make photovoltaic cells using a material called copper indium gallium selenide, or CIGS.

Unlike conventional solar cells, which are made from silicon wafers, CIGS cells can be deposited on glass or flexible materials, much as ink is printed on rolls of newspaper. Though the technology is less efficient at converting sunlight into electricity, the promise of “thin film” solar cells was that they could be made cheaply.

However, producing CIGS cells on a mass scale has turned out to be a formidable technological challenge, requiring the invention of specialized manufacturing equipment.

While Silicon Valley companies were working on the problem, silicon prices fell and Chinese companies like JA Solar, Suntech and Yingli Green Energy rapidly expanded production of conventional solar panels, supported by tens of billions of dollars in inexpensive credit from the Chinese government as well as other subsidies like cheap land.

Arno Harris, chief executive of Recurrent Energy, a San Francisco solar developer acquired by Sharp last month, said he chose to sign a supply deal with Yingli because the Chinese company offered low prices, quality products and financing.

“We realized that would enable us to bid competitive power prices from projects that could also be efficiently financed,” Mr. Harris said in an e-mail. “It may seem obvious to state it this simply, but declining prices are the key to driving the next era of demand for solar.”

Chinese solar panel makers now supply about 40 percent of the California market, the largest in the United States, and the bulk of the European market, according to Bloomberg New Energy Finance, a research and consulting firm.

“We grow every year with double revenue and almost double capacity,” said Fang Peng, the chief executive of JA Solar, in a telephone interview from the company’s Shanghai headquarters. “At end of the year, we will have 1.8 gigawatts of capacity and will have grown from 4,000 employees at the beginning of this year to more than 11,000.”

By comparison, Solyndra expects to have a total production capacity of 300 megawatts by the end of 2011.

The competition from the Chinese has prompted some Silicon Valley companies, like AQT Solar, to pursue new strategies to survive.

In The New York Times last week, I wrote about how Yingli, the Chinese solar module maker, is heading east after capturing nearly a third of the California market last year:

Yingli, the Chinese solar module maker that captured nearly a third of the California market last year, has struck a deal to supply a New Jersey developer with more than 10 megawatts of photovoltaic panels.

The agreement announced Tuesday with SunDurance Energy for the first time brings Yingli’s reach to the East Coast. SunDurance, owned by a construction and engineering firm, the Conti Group, will install the Yingli solar panels on rooftops, in carports and in ground-mounted solar farms.

“Being able to have a presence on both coasts and in some of the other states that are emerging is very significant for us,” Robert Petrina, the managing director for Yingli’s American operations, said.

He said Yingli shipped 15 megawatts of modules in the fourth quarter of 2009 in the United States. The deal with SunDurance calls for Yingli to provide 10 megawatts through the third quarter of this year. The company had previously supplied solar panels to SunDurance for other projects.

Yingli, based 100 miles south of Beijing in the city of Baoding, opened offices in New York and San Francisco at the beginning of 2009. By year’s end, the company held 27 percent of the California market, according to Bloomberg New Energy Finance, a research and consulting firm. Its stock is listed on the New York Stock Exchange.

Chinese firms, including the Yingli rival Suntech, increased their share of the California market to 46 percent, up from 21 percent at the beginning of 2009.

Mr. Petrina said declines in the price of polysilicon — a vital ingredient in solar cells — and in subsidies paid by European countries made it feasible for Yingli to enter the American market.

In The New York Times on Thursday, I write about a report from Bloomberg New Energy Finance that shows China has become the dominant solar module supplier in the huge California market:

China’s rise as a major solar module maker has been meteoric, but perhaps nowhere has its ascension been faster than in California, the United States’ largest solar market.

The Chinese company Yingli Solar has captured 27 percent of California’s solar market, according to a preliminary report.
Over the last three years, China’s share of the California market, in terms of supplied megawatts, has risen to 46 percent, from 2 percent, according to a preliminary report by Bloomberg New Energy Finance, a research and consulting firm.

At the same time, the share supplied in California by American companies has declined to 16 percent, from 43 percent.

“The ascendancy of Chinese manufacturers would be noteworthy regardless of market conditions, but is particularly telling in a time when purse-strings are still tight,” the report said.

At the beginning of 2009, Chinese solar companies supplied 21 percent of the market; by year’s end their stake had more than doubled.

photos: Schott

German solar company Schott on Monday cut the ribbon on a $100 million factory in Albuquerque, N.M., that will produce solar panels as well as receivers for solar trough power plants. Meanwhile, Chinese solar giant Suntech said Monday that it will build a solar cell manufacturing plant in the United States.

The move to North America comes as the European market softens as government subsidies ebb and solar panel prices fall. Despite the severe U.S. recession, Schott and Suntech are betting that the solar market will boom when the economy recovers and they’ll gain a competitive edge by manufacturing near customers.

“We think North America in general is the next big market for solar power,” Gerald Fine, CEO of Schott Solar’s North American operations, told Green Wombat. “Especially in the case of concentrated solar receivers you want to be close to your customers and provide great customer service and low shipping costs.”

And it doesn’t hurt to be generating green jobs as well. The 200,000-square-foot New Mexico factory employs 350 people. The plant was built too late to take advantage of the Obama stimulus package’s 30% tax credit for renewable energy manufacturing. But Fine said the tax credit will encourage Schott’s plans to eventually expand the facility to 800,000 square feet with a workforce of 1,500.

The receivers the factory makes are long glass-covered steel tubes that sit above parabolic troughs in large solar farms. The troughs concentrate sunlight on the receivers to heat a synthetic oil inside that is used to create steam that drives an electricity-generating turbine.

Fine declined to discuss specific customers for the receivers but there are numerous solar trough power plants being planned for the Southwest, including Abengoa Solar’s Solana project in Arizona and utility FPL’s (FPL) Beacon 250-megawatt solar in California.

“We feel pretty comfortable with our order books in both product lines for the foreseeable future,” said Fine. “If you look at the publicly announced plans and try to put a reasonable probability of them being completed, there’s in excess of two gigawatts of power plants out there.”

Schott will have the North American receiver market to itself but will face some stiff competition when it comes to making photovoltaic modules. Thin-film solar cell maker First Solar (FSLR) is headquartered in neighboring Arizona and claims the lowest cost of manufacturing. Last year, German solar cell maker SolarWorld opened a factory outside Portland, Ore., while Silicon Valley’s SunPower (SPWRA) makes some of the most efficient solar cells — albeit overseas.

And now China’s Suntech (STP) is moving into the U.S. manufacturing market. The company on Monday said it is looking at several states as potential sites for a factory and will make a decision on where to locate the facility within six months

“We believe in the outstanding long-term prospects of the solar energy market in the United States, and we will continue to invest in our ability to meet a substantial portion of that potential growth through in-market manufacturing,” Suntech CEO Zhengrong Shi said in a statement.

Another day, another solar deal. San Francisco’s Recurrent Energy on Wednesday will announce that it is acquiring a 350-megawatt portfolio of photovoltaic projects from UPC Solar of Chicago as the industry continues to consolidate.

“Since the financial crisis set in last year we’ve kept an eye out for opportunities to pick up a pipeline of projects,” Recurrent CEO Arno Harris told Green Wombat. “You’re seeing companies like Recurrent that are well-capitalized take advantage of the market consolidation.”

Recurrent, which last year scored $75 million in funding from private equity firm Hudson Clean Energy Partners, installs large-scale solar arrays on commercial rooftops and at government facilities and then sells the electricity generated back to the hosts under long-term power purchase agreements.

The deal puts Recurrent in the power plant business as UPC’s portfolio includes a number of 10-megawatt projects in Ontario designed to take advantage of the province’s generous feed-in tariff for solar farms. “It’s a significant addition to our project pipeline,” Harris said. The projects are in various stages of development but Recurrent expects that 100 megawatts will be completed by 2012. The company stands to benefit from an expected decline in the price of solar panels this year.

Harris declined to reveal the financial terms of the deal but said that Recurrent is putting relatively little money up front. “We wrote a small check to compensate UPC Solar for the work done so far and we’ve committed to continue funding projects,” Harris said. “Then they’ll get a bonus paid at end for completed projects.”

The deal follows thin-film solar company First Solar’s (FSLR)’s $400 million acquisition this month of Silicon Valley startup OptiSolar’s 1,850 megawatt pipeline of photovoltaic power projects, including a 550-megawatt power plant to be built for California utility PG&E (PCG). The same day as the OptiSolar deal, Spanish solar developer Fotowatio bought San Francisco solar financier MMA Renewable Ventures’ project portfolio.

About Green Wombat

Green Wombat is written by
Todd Woody, a veteran environmental journalist based in California who writes for The New York Times, the Los Angeles Times, Grist and Yale e360. He's one of the few people on the planet who have held a northern hairy-nosed wombat in the wild.

Todd formerly was a senior editor at Fortune magazine, an assistant managing editor at Business 2.0 magazine and the business editor of the San Jose Mercury News.